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Housing Loan Planning Advices


HDB’s HLE Scheme and Prudent Planning


  • lsf Jan 2007 - HDB implemented the Housing Loan Eligibility scheme (HIE) for both direct and secondary market purchases.
  • All home buyers must ensure that they have the financial ability to make the purchase.
  • Private property buyers should seek comprehensive housing loan planning assistance prior to any purchase.
  • Buyers should not make hasty decision to purchase in the hope of making a quick investment return.
  • It is not only the initial 5% cash deposit that the buyer should be concern with.
  • Financial institutions today have very thorough and stringent credit approval processes.
  • Familiarize yourselves with CPF's latest guidelines and policies pertaining to property purchases.

A Prudent Mortgage Plan

  • Before you start your house hunt, a proper budget must be set and a detailed mortgage calculation done.
  • Do not clean out your cash and CPF reserves at the initial stage.
  • You must know the stability of your job and future income.
  • Sufficient insurance coverage to protect your investment.
  • CPF Minimum Sum Scheme
  • Familiarize yourself with the latest housing loan packages.
  • Good to know:
    • monthly cash and CPF repayments,
    • principal vs interest payments,
    • breakeven point to turn over a profit,
    • rental returns vs interest payments,
    • investment return and yield,
    • cash and CPF breakdown,
    • cash proceeds,
    • and insurance required.
  • Speak to your existing financier or to an experienced mortgage planner.
  • Some features to look out for:
    • Fixed interest rate
    • Variable interest rate
    • Blended rates
    • Pegged rates
    • Interest servicing only
    • Linked account
    • Loan tenure
    • Lock in period
    • Claw back
    • Progressive payment scheme
      • Different payment scheme
      • Types of loans offered: housing loan, bridging loan, construction loan, OD and 5th charge term loan




Factors That Financial Institutions Take Into Consideration When Approving A Loan


  • Monthly income
  • Monthly CPF contributions
  • Existing funds in the CPF Ordinary Account
  • Other existing financial commitments
  • Employment profile
  • Age of borrower
  • Nationality
  • Debt Servicing Ratio (the ratio of affordable repayment based on gross financial commitments)
  • Bankruptcy
  • Credit History
  • Financial strength of joint borrowers (if any)
  • Liquidity